"We're seeing more regular customers developing. People are live-tweeing their orders and posting pictures of their orders on social media as they're delivered. There has been nothing but positive feedback since the Ann Arbor launch."

But it's uncertain whether the deliveries and positive feedback will continue.

In an April 21 email response to an Ann Arbor News inquiry about whether the business complies with state regulations, Carol Shepard Estill, a 14-year investigator with the Michigan Liquor Control Commission, said that DrinkDrivers has not been operating within the confines of MLCC Code 436.1403(11) and that the business is not legal in the state. An excerpt from the code states:

"A retailer that holds a specially designated merchant (beer and wine) license in this state...may deliver beer and wine to the home or other designated location of a consumer in this state..." if a series of requirements are met.

The DrinkDrivers business model is set up so it meets all of the requirements of MLCC Code 436.1403(11) and it has the right to deliver beer and wine, Shepard Estill explained.

DrinkDrivers is a new alcohol delivery services that allows customers to order alcohol online and have it brought to their doorstep. Here is the company's Ann Arbor delivery coverage area.Courtesy image

DrinkDrivers allows its customers to use a mobile or web-based app to order from its state-licensed partner. After placing the order, customers pay for their orders through the application and the licensed dealer delivers the product.

DrinkDrivers doesn't make money directly from the sale of the alcohol. Instead, it charges a $2.87 flat-rate delivery fee, regardless of the quantity of alcohol ordered.

The problem comes into play with the delivery of spirits, or hard liquor, Shepard Estill said.

"... (S)pirits â anything other than beer and wine â may not be delivered to consumers," she said.

Nadel insists that he and his legal team have been exhaustive in making sure that the business complies with state regulations.

He said that for more than a year leading up to the Ann Arbor launch, his legal team read through all of the Michigan legislation as it pertains to alcohol delivery in the state to make sure they would not be breaking any laws by bringing DrinkDrivers to Michigan.

"There are things in the law that seem contradictory, and so a lot of people will read just the statutory portion of the law, but when you drill down and read the clarifying rules you can see that (the delivery of spirits) is allowed," he said.

"We do not view this as some sort of adversarial process where we're trying to overcome obstacles that the state presents to us. This is a completely new kind of business and it's definitely a disruptive technology. We don't view it as a combative thing, but we made sure we did our research and we are definitely willing to sit down very amicably and explain everything to the state regulators."

Nadel and his team went through similar sit-down meetings with Florida legislators when they launched DrinkDrivers last year near the campus of UCF.

Shepard Estill said that several legal changes have been made since 2011 as it pertains to the delivery of beer, wine and spirits. She said that it could be that "either Mr. Nadel or someone at the state" could've been misinformed about whether the delivery of spirits is allowed under state law.

She also said that there was no formal investigation being launched as of April 21. "It is the goal of the commission to bring their licensed retailers into compliance with the liquor laws," Shepard Estill said.

Several weeks after The Ann Arbor News initially contacted the state about the delivery service, a spokeswoman for the Michigan Liquor Control Commission said in an email that the state is "reviewing the matter," but did not specify what the review entailed. She also said that there was not an official investigation underway as of May 12.

"...(S)ince this is the first of its kind, the MLCC must review all regulatory statutes before determining a conclusion," MLCC spokeswoman Andrea Miller wrote in the May 12 email.

Miller said that at this time, the state is trying to decide whether the business is compliant with state regulations.

The MLCC staff isn't the only group with questions about rules surrounding alcohol delivery. Other retailers want to know what's stopping them from using delivery as a form of sales, too.

Matt Morgan, the proprietor of Morgan & York Fine Wines and Specialty Foods on Packard Street in Ann Arbor, said that the delivery of beer, wine and spirits was a substantial part of his business before a legislation change in 2011 made the delivery of spirits illegal.

"We used to ship within the state. We had clients on the west side of Michigan and people who lived most of the year in Ann Arbor who would have us ship to northern Michigan if they were staying for some period of time. We used to be able to do that and the biggest impact it's had on us is when we do deliveries to our institutional clients and we can't deliver to them," he said.

"We can't deliver spirits and it's sort of awkward if we have a delivery to make and we can deliver their wine or beer, but we have to hold their spirits for pickup. It's a service issue for our customers."

Morgan said that the law is "hard to get at because it's not well written," whether it's someone new to the industry or someone who's a 20-year veteran.

"I just don't understand. If the state says a business or institution is able to deliver wine and beer, why not liquor? It just doesn't make sense," he said.

Shepard Estill and Nadel have tried to contact each other by phone several times since April 21, but the two sides have been unable to connect, Nadel said.

Both did confirm that Shepard Estill talked with the lawyers at DrinkDrivers in order to get a better understanding of how the business works. Nadel said the lawyers "walked her through the legal model" and "explained the details of the partnership with the retailers."

"She had an extensive conversation with our attorneys, but as far as we're concerned, we're operating on pretty solid legal ground. We are very committed and open to working with any regulators to further explain how our business model works and how it fits within Michigan's regulatory structure," Nadel said.

"We're providing a service that people want and doing so within the parameters of the law."